American officials – without any trace of irony – label Iran as militaristic, aggressive, expansionist, interventionist, even as hegemonic and imperialistic. The media often echo this, depicting Iran as a cross between the Persian Empire and the Third Reich, aspiring to re-establish a Pax Iranica across the region. Neoconservatives go further, claiming that Iran ‘declared war’ on the US in 1979; that the two are in a ‘life and death struggle’; that this is World War Four (the Cold War was World War Three); and that President Mahmoud Ahmadinejad is at the head of an Islamofascist movement out to re-create the early Caliphate.

We need to take a reality check. Iran spends $6 billion a year on its armed forces; Turkey and Israel both spend more than $10 billion, Saudi Arabia $21 billion, and the Gulf sheikhdoms, which are not so much countries as petrol stations, together easily outspend Iran. Meanwhile, the US pours more than $700 billion a year into its war machine. Before the 1979 revolution, Iran allocated as much as 18 per cent of GDP to the military; the figure is now under 3 per cent. During his recent tour of the region, Dick Cheney offered to sell $36 billion worth of arms to Saudi Arabia and the Gulf sheikhdoms to counter the Iranian threat. In a rare candid moment, a former commander of US forces in the region admitted that Iran was an ‘ant’ that could be crushed at any time.

The US and Iran do have a real conflict of national interest – especially when national interest is determined by the maximalists rather than the minimalists in each country. The Bush Doctrine forthrightly declared that the US could remain the sole superpower of the 21st century by, on the one hand, forestalling the rise of other world powers, and, on the other, resorting to ‘regime change’ and ‘pre-emptive strikes’ to prevent the emergence of regional powers that could threaten ‘vital American interests’. This set America and Iran on a collision course, since Iran naturally considers the Persian Gulf to be on its doorstep, and since no interests are more vital to the US than oil, even if the word itself is scrupulously avoided. The Bush Doctrine may not have been given an official funeral, but Washington is now making it clear that it is willing to coexist with the Islamic Republic – so long as it does not actively threaten America’s vital interests by trying to develop nuclear weapons.

Iran is not a totalitarian state: the Islamic constitution, drafted in the early days of the revolution, is a hybrid, combining democracy with theocracy, vox populi with vox dei, popular sovereignty with clerical authority, modern concepts of government with Ayatollah Khomeini’s notion of velayat-e faqih (jurist’s guardianship). According to Khomeini, the clergy – in the absence of the Hidden Imam, the messiah who has yet to return – were the true guardians of the state. After all, the sharia, or divine law, was handed down to lead the community on the right path, and since the clergy had the expertise to understand, interpret and implement the sharia, it followed that they should guide the state.

The constitution gives the clergy extensive powers. It holds that the Rahbar (guide-leader) – known in the West as the Supreme Leader – has to be a ‘suitable cleric’ elected by an Assembly of Religious Experts. The Supreme Leader has the authority not only to ‘supervise’ and ‘guide’ the republic, but also to ‘determine the interests of Islam’. He appoints the commanders of the armed forces, the director of the national radio and television network, the heads of the major religious foundations, the prayer leaders in city mosques, and the members of national security councils dealing with defence and foreign affairs. He also appoints the chief judge, the chief prosecutor, special tribunals and, with the help of the chief judge, the 12 jurists of the Guardian Council – a glorified supreme court that can both vet electoral candidates and veto parliamentary bills. The Guardian Council also sets examinations for candidates to the Assembly of Religious Experts. (Reputable theologians have been known to fail.) This assembly not only elects the Supreme Leader but can also dismiss him on grounds of ill-health or incompetence.

The constitution also incorporates more democratic features. The public – through secret ballots and universal adult suffrage – has the authority to elect local councils, parliaments and presidents, as well as the Assembly of Religious Experts. Local councils supervise regional administrators. Parliament has the power to make and unmake ministers, approve government budgets, investigate questions of national importance and impeach presidents. The president, as chief executive officer, can choose ambassadors, provincial governors and, with parliamentary approval, cabinet ministers.

The inherent contradiction between theocracy and democracy was held in check in the years when Iran was fighting Iraq and the charismatic Khomeini dominated the national scene. But the end of the war in 1988 and Khomeini’s death a year later paved the way for open competition between the two wings of the revolutionary movement. The new Supreme Leader, Ali Khamenei, lacked Khomeini’s charisma and clerical standing – he had been hastily elevated to the rank of ayatollah. Under Khomeini he had been head of the clerical ‘commissar’ network inside the armed forces, and an eloquent and intellectually inclined preacher of Friday sermons at Tehran University. Khamenei has managed to some extent to continue his predecessor’s policy of balancing one group against another, and making sure that no single side gains too much power. On becoming Supreme Leader, he put away his pipe – which smacked too much of the Western intellectual – and cultivated the clerics who administer the major religious foundations, especially in the seminaries of Qom and his home city, Mashhad. Under him, the regime resembles a clerical oligarchy more than an autocracy. Maximalists consider the Islamic Republic a transitional stage on the path towards a full imamate, in which the Supreme Leader will rule as the sole representative of the Hidden Imam. Minimalists – often identified as ‘reformists’ in the West – hope that the republic will eventually become more democratic as a result of popular pressure, with the Supreme Leader acting as a figurehead.

In the 1990s, the minimalists, led by President Mohammad Khatami, won landslide victories in local, presidential and parliamentary elections. They promptly passed more than a hundred reform bills, some of which explicitly contradicted basic concepts in the conventional interpretations of the sharia. They eliminated legal distinctions between Muslims and non-Muslims, and between men and women. They also raised the marriageable age; stipulated the equal division of property between divorced couples; ratified the UN Declaration on the Elimination of All Forms of Discrimination against Women (a declaration too radical for the US Congress to consider); introduced jury trials; strengthened the constitutional ban on torture by defining sleep deprivation and solitary confinement as torture; set up a press court to protect newspapers from the conservative judiciary; and, most daring of all, tried to strip the Guardian Council of the power to vet electoral candidates. There was even talk of a national referendum aimed at trimming the powers of the unelected bodies.

Some reformers, such as Akbar Ganji, a former revolutionary guard commander turned dissident, and Abdulkarim Soroush, a leading ‘Muslim intellectual’, went even further, arguing that politics and religion belong to different realms and that the latter should be confined to matters to do with personal ethics and beliefs. Not surprisingly, conservatives objected, accusing these reformers of being secularists trying to smuggle in the French Enlightenment under the pretence of bringing about a Protestant reformation within Islam.

The electoral landscape, however, shifted drastically early this decade. It did so in part because Khatami failed to deliver on his promises: the conservatives in the Guardian Council vetoed many of his reform bills, and he feared that to cross them would provoke retaliation from the revolutionary guards. But the biggest cause of the shift was Bush, wh0 in 2002 named Iran as a member of his Axis of Evil, even though Tehran had just helped the US overthrow the Taliban and instal Karzai in Kabul. This blow was compounded in 2003, when the Bush administration, riding high after its quick victory over Saddam, contemptuously dismissed an Iranian offer to strike a ‘grand bargain’. Although the White House denied it, leaks from the State Department – as well as from the Iranian Foreign Office – confirm that Iran offered to accept additional nuclear inspections, to help stabilise Iraq, co-operate in tracking down al-Qaida, and use its influence to moderate the activities of Hamas and Hizbullah. In return, Tehran sought guarantees that the US would accept Iran as a Gulf power and give up its policy of regime change. In Ahmadinejad: The Secret History of Iran’s Radical Leader, Kasra Naji provides a detailed and informative account of the decline of the reform movement, though he tends to underestimate the inadvertent role played by the Bush administration. Most observers would agree with Khatami that the White House helped to pull the rug from under the reformers. Once Washington refused the bargain, Tehran, not surprisingly, tried to save face by denying it had ever been offered.

With the reformers disillusioned and in disarray, Ahmadinejad – the former mayor of Tehran – won the presidency in 2005. He promised to stand tall against American ‘arrogance’ (Khomeini had substituted this term for the Marxist-sounding ‘imperialism’), to strengthen national security, redistribute wealth, eradicate unemployment, pay due respect to war veterans, and, in general, revive the self-sacrificing spirit of the Islamic Revolution. For Khatami, the history of Iran had been ‘the struggle for democracy’. For Ahmadinejad, it was the struggle to establish ‘true’ Islam. On the eve of the ballot, Bush helped Ahmadinejad by dismissing Iranian elections as meaningless. This energised Ahmadinejad’s core constituency – around 25 per cent of the electorate – of war veterans, revolutionary guards and the truly devout, many of whom came from the ranks of the urban poor. In the first round, reformers either stayed at home or split their vote between competing liberal candidates. In the second round, faced with a choice between Ahmadinejad and the former president, Akbar Hashemi Rafsanjani, who epitomised the establishment, even more stayed at home, especially professionals and college-educated women. Ahmadinejad won more by default than because of a genuine shift in public opinion.

Since his election, Ahmadinejad has taken every opportunity to revive the rhetoric of 1979. But there are limits to his power: he heads the cabinet, but can’t pick his ministers. He holds office for four years, but then must be re-elected, and spiralling inflation has jeopardised his chances of getting back in next year. What’s more, although he has access to the Supreme Leader, he is far from being his only adviser. Khamenei also takes advice from reformers such as Khatami; from foreign ministry experts, many of whom are moderate conservatives; and from Rafsanjani, the consummate pragmatic conservative. Although Rafsanjani lost to Ahmadinejad, he remains the country’s second most powerful politician. He chairs the Assembly of Religious Experts as well as the Council of Expediency, which has the authority to resolve differences between the three branches of government. Also, as a founding member of the Islamic Republic and one of Khomeini’s closest advisers, he has a wide network among the generation that made the Revolution.

Ahmadinejad has used the bully pulpit to resurrect Khomeini’s famous slogan, ‘The US can’t do a damn thing’; this appears more apt now that the ‘Great Satan’ is ensnared in the Iraqi (and Afghan) hell. He has argued that Israel lacks the capability to strike Iran on its own and insinuated that any such strike would increase his influence rather than cause him irreparable damage.He has revived Khomeini’s mantra that Israel should never have been established, and reversed Khatami’s position that Iran would accept a two-state solution if that was agreeable to the Palestinians. To top it all, he has doubted the reality of the Holocaust and sponsored with much fanfare an ‘international conference’ in Tehran on the topic. This raised as many eyebrows in Iran as in the West. As Naji remarks, ‘what he could not see was that by playing the Holocaust card he was making the American and Israeli hostility to Iran appear reasonable and justifiable.’ The rhetoric, however, helps him consolidate his electoral base.

He has also used parades to show off missiles, with the clear intention of sending a message that they could be aimed at Israel. Even if these missiles have dubious capabilities, such events allow the regime to boast of its military prowess to its own citizens. They also provide the Western media with a perfect opportunity to depict the regime as an international threat. Ahmadinejad has reversed the adage ‘speak softly but carry a big stick.’ He has exaggerated the progress of Iran’s nuclear programme and promised to share nuclear knowledge with other ‘Muslim states’. He sees the nuclear issue as a game of chicken, describing Iran’s nuclear programme as a car with no brakes and no reverse gear speeding down a one-way street. What is more, he has sent ‘inspirational’ letters – in the tradition of Khomeini and the Prophet – to world leaders. The letter to Angela Merkel describes Germany as an innocent victim of World War Two. As Naji shows, such sentiments derive not only from belligerence but from Ahmadinejad’s lack of familiarity with the outside world.

His pronouncements have caused consternation among reformers, moderates and even conservatives in Iran. They realise that such statements provide ammunition for neoconservatives in Washington, isolate Iran from Europe, and prevent access to the technology needed to develop the country’s substantial gas reserves (Western oil companies have a monopoly over the technology). These untapped reserves could enable Iran to solve its main long-term problem: creating work for the ever increasing number of graduates. In the last thirty years, it has made substantial progress in improving the standard of living, expanding the educational system, lowering infant mortality, raising life expectancy and bringing electricity, medical clinics and running water to the countryside. In the next decades, Iran will need a substantial infusion of investment and technology to consolidate these successes.

The decline of the neocons could well sharpen the differences between the minimalist and maximalist wings in Tehran. Both remain highly suspicious of America, and both are determined to preserve the Islamic Republic, t0 make Iran a consequential power in the region and to pursue the country’s interests, whether over Chechnya, Kosovo and Afghanistan, or in the war between Christian Armenia and Muslim Azerbaijan. What is more, both wings are equally committed to harnessing nuclear energy, in part for national prestige – more than 90 per cent of the public supports the programme – and in part because it would enable them quickly to produce nuclear weapons in an emergency. For most Iranians, whatever their political leanings, the formative crisis in recent years was the failure of the international community to object when Saddam Hussein used chemical and biological weapons against Iranian troops. The US facilitated the Europeans as well as the Chinese and Russians in selling these weapons to Iraq and then, when Iraq used them, the US spread the lie that Iran was the culprit; it even claimed that Iran was using these weapons on its own troops to curry international sympathy. This belief in Iran’s right to nuclear power is held even by Akbar Ganji, who stands far to the left of most minimalists. In The Road to Democracy in Iran, he writes: ‘In dealing with the Muslim world, or other non-Western countries, the West must avoid policies that betray a double standard – for instance, ignoring Israel’s nuclear bombs while insisting that Iran does not even have the right to enrich uranium for nuclear power.’

The nuclear issue, however, creates a significant difference between minimalists and maximalists. The former would like to proceed as they have done in the last two decades. They would like to develop the programme slowly, thus gaining the knowledge and equipment needed to produce weapons in the long term. In nuclear parlance, this is known as the Japanese option. Some thirty countries have this option, and it has probably been Iran’s unstated goal for the last twenty years. It would be in the national interest to have the capability to build a bomb; it would not be in the national interest to have a bomb. On the contrary, that would damage national security because it would prompt the US (or Israel) to attack. In the past the US has been adamant that Iran should not even have the capability.

The danger now is that maximalists like Ahmadinejad may be tempted by the American debacle in Iraq to up the nuclear pace, threaten to withdraw from the Non-Proliferation Treaty, and try to gatecrash the nuclear arms club. Possession of a bomb or two would flatter the national ego and give the false impression that Iran is a real counterweight to Israel and the US with their huge arsenal of nuclear weapons. However, it would certainly alienate Europe, make Israel even more paranoid, lead the US to tighten sanctions, and could even prompt air strikes, though that would in the long run make America’s task in Iraq and Afghanistan even more impossible. The minimalists, meanwhile, are increasingly alarmed. Although Khamenei shares Ahmadinejad’s anti-Israeli and anti-American stance, it isn’t clear he would be willing to risk serious US retaliation.

Meanwhile, both sides appear oblivious to the resemblances between the two presidents. Bush entered the White House as a ‘compassionate conservative’, representing ‘ordinary folk’, distancing himself from the ‘Beltway’, and describing Jesus Christ as his favourite ‘philosopher’, while Ahmadinejad came in as a ‘principalist’ conservative, promising populist measures and a return to revolutionary values, criticising establishment figures such as Rafsanjani, and claiming to feel the actual presence of the Hidden Imam. Bush knew that to enter the White House he had to reach beyond his evangelical electoral base; Ahmadinejad realised that to win he had to court those outside his ‘fundamentalist’ constituency as well as discourage reformers from voting. Neither Bush nor Ahmadinejad would have won office without a helping hand from their supreme courts. Bush cut taxes; Ahmadinejad travels around the country handing out cash. Ahmadinejad spends time in cabinet meetings mapping out boulevards to prepare for the return of the Hidden Imam; the Bush administration spent time assuring supporters that Israel’s withdrawal from Gaza would not delay the inevitable return of the Messiah. As Iran and the US enter crucial negotiations in the months to come we can only hope that politicians with a firmer grip on reality will be in power in both Tehran and Washington.